Per Capita External Debt Stands At Tk 63,048

In the last fiscal year, Bangladesh's per capita external debt increased by $22.05, reaching $579.28 (equivalent to Tk 63,048), compared to $557.23 in the previous fiscal year. This increase can be attributed to a dollar exchange rate of Tk 108.84 in FY23. Over the past five fiscal years, per capita debt has surged by 53%. For instance, in FY19, this debt stood at $378.2 or Tk 31,776, according to the most recent data from the Bangladesh Bank.

During the same five-year period, total external debt nearly doubled, reaching 21.8% of the gross domestic product (GDP) in FY23, up from 17.8% in FY19. In FY19, foreign debt was $62.63 billion, soaring by 57.97% to $98.94 billion in the most recent fiscal year, as indicated by the central bank's data.

This surge in external debt occurs at a time when Bangladesh's foreign exchange reserves are dwindling and foreign exchange is under pressure. However, there was a 29% decline in short-term external debt to $16.03 billion in FY23 compared to the previous fiscal year.

According to the World Bank's International Debt Report 2022, India's foreign debt increased by approximately 83%, Pakistan's by 101%, and Sri Lanka's by 119% over the ten-year period between 2011 and 2021. In the same timeframe, Bangladesh's foreign debt increased by 213.6% according to central bank data.

The data also reveals that, as of June 2023, the public sector had borrowed $76.67 billion in foreign credit, with $64.57 billion directly borrowed by the government and the rest by various government institutions.

In June, short-term foreign loans in the private sector saw a slight increase to $22.25 billion from $22.18 billion in March, while buyers' credit decreased to $7.68 billion in June from $8.13 billion in March 2023.

Economists generally consider external debt as risky when it exceeds 40% of GDP. Ahsan H Mansur, Executive Director of the Policy Research Institute of Bangladesh, emphasized that the government's revenue shortage forces it to borrow loans for the implementation of major national projects.

He noted that in the past, Bangladesh received external debt with more favorable terms, but now it has to borrow under stricter conditions, which could lead to challenges in remittances and export earnings. Therefore, he stressed the importance of focusing on boosting remittances and exports.

Furthermore, Mansur highlighted that after Bangladesh's graduation from the LDC status, obtaining loans at market-based interest rates would be challenging for the country.

In summary, a country's external debt comprises the total amount it owes to foreign creditors, including foreign countries, international organizations, and foreign private entities, encompassing both public and private debt obligations. Bangladesh primarily obtains foreign loans from multilateral institutions such as the World Bank, the International Monetary Fund, the Asian Development Bank, the Islamic Development Bank, and major overseas commercial banks.